3 Ways to Get Credit-Healthy

credit healthy

3 Ways to Get Credit-Healthy

Having a not-so-great credit score can affect a lot of things in your financial life. A low credit score not only makes it harder to acquire new credit, but it can also bring higher interest rates on everything from mortgages to credit cards to car loans. 

By taking the right steps, you can improve your credit score tremendously over time. Pivotal Wealth is committed to helping our clients get credit-healthy through debt reduction and improved financial literacy. If you’re wondering how to improve your credit and get a good credit score, read on to learn more. 

Three Ways to Get Credit-Healthy

1: Pay All Your Bills on Time

Did you know that missing just one payment can significantly hurt your credit score? Payment history plays the biggest role in determining your overall score, and a late payment can stay on your credit report for up to seven years. Paying everything on time, every single time is the most important part of keeping your credit score healthy. 

To avoid missing payments, try signing up for automatic withdrawals. Set monthly expenses like phone and utilities on autopay and you won’t forget to pay them. Many companies also offer to send automatic email or text reminders when your billing date is approaching. If not, set a recurring reminder in your calendar.

2: Watch Your Balances Closely 

Your credit utilization ratio is the second most important factor in your credit score. Your credit utilization ratio is based on the percent of your credit limit that you actually use. Try to keep your credit card balances well under 30% of your total credit limits. It’s also wise to pay the full balance of your card each month, not just the minimum balance. It’s okay to carry a larger-than-normal balance if you have to, but try to pay it off as soon as you can. 

3: Think Twice Before You Apply for New Credit 

Did you know that applying for a line of credit or a credit card shaves points off of your credit score every time? When lenders or card issuers check your credit to determine whether or not you are eligible, they perform a “hard inquiry,” which detracts points. Additionally, taking out a new line of credit reduces your average age of credit, which can further damage your credit score.

Get Credit-Healthy with Pivotal Wealth

Pivotal Wealth helps ordinary people become credit-healthy, financially literate, and debt-free. If you are struggling to improve your credit health or if you are concerned about your credit score, we can help! Give us a call today to learn more about how to read your credit report and improve your credit score.

Images used under creative commons license – commercial use (1/6/2022). Photo by rupixen.com on Unsplash

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Matt Lovelady is a co-founder and managing vice president of Pivotal Wealth. He has launched multiple businesses in the financial services space and is passionate about helping people become debt-free, build their wealth, and plan effectively for their retirement.